US new home mortgage originations are expected to rise by 9% in 2022. However, experts predict dramatic declines in all other mortgage areas due, largely, to interest rate rises. Some believe that drops in refinance will be as high as 62%.1
What will this mean for mortgage servicers? According to Marina Walsh, vice president of industry analysis at the Mortgage Bankers Association, “Many lenders will rely more heavily on their servicing business to achieve financial goals.” She went on to tell CNBC that, “The servicing outlook is more complicated today, with the expiration of many COVID-19-related forbearances and the need to place borrowers into post-forbearance workouts.”2
Expect more pressure in an already complex environment — sounds like business as usual in the world of Mortgage Servicing.
Mortgaging Servicing professionals are used to being under the spotlight when it comes to achieving financial goals. This is a margin tight business. As one of our customers recently told HFS Research, “If you’re a good servicing company, you strive to make a dollar per loan per month.”
And yes, a complex environment of high stakes, low margins and ever-toughening regulation and compliance is only likely to get more complicated as pandemic-related mortgage bailouts come to an end. However long we’ve been in the industry, none of us has the crystal ball to predict how the current situation will span out, but I believe that, while foreclosures will increase dramatically, total numbers are unlikely to be higher than before the pandemic. What will happen is that the numbers will adjust to their usual rate having been falsely low due to forbearance programs, and what that means is an unpredictable but likely surge in the need for servicing support as a lot of people will need additional support, and all at the same time.
Our overriding purpose as an industry, and as people, remains the same — to help as many borrowers stay in their homes as possible by modifying and flexing mortgages terms. Nobody wins — not borrowers, not lenders — when homes are repossessed. Our job is to be there to give customers the support they need when, where and how works best for them, and we need to make the process as invisible and painless as possible for our customers.
New technologies are very much the here and now in Mortgage Servicing, and effective automation is rapidly becoming a table stake rather than a differentiator. Why? Because you just can’t give customers the fast, effective, omnichannel support they demand without it. The real differentiator in Mortgage Servicing is the quality of your people, and the importance of the experience they deliver to your customers matters more than ever in our current environment.
You need people to ask the right questions for automation to answer, you need people to program the machines to answer the questions and source and present information in the best ways, you need people to train chatbots to be as personable as they can be in the right hands, and ultimately — when the chips are down — people want to talk to people. Automation exists to support your people and their customers, and to give them the insight and support they need to be their best. It frees up your talented frontline teams, so they have more time to spend on what matters most, talking to people who need their help, discussing their options, and working with them to help them develop a solution.
It’s this focus on the importance of people that stands out for me in the latest POV from HFS Research. They explore how a leading US mortgage service provider trusts Sourcepoint as their primary customer experience partner because of the strong values we place on employees, on culture, on experience, and on a willingness to learn.
Whatever complexities, complications and challenges our customers, their customers and our industry face, the best solutions will always be found by people working together to put other people first. If you agree, and would like to discuss further, I’d love to talk.
1,2, Real estate: Mortgage originations will drop 33% in 2022 as interest rates rise (cnbc.com)
Stephen Staid is Executive Vice President of Mortgage Practice Strategy responsible for expanding Sourcepoint’s market leading mortgage solutions, along with leading its “Digital First Digital Now” growth strategy. Steve has nearly three decades of mortgage industry expertise and has been a distinguished leader in some of the largest mortgage servicing companies and mortgage-related subsidiary enterprises in the world.